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The Elevation Blog

Payments Choice: Good or Bad in a Faster Payments Environment?

Jan Estep, President & CEO, NACHA

Choice. Is it good or bad?  Most people would say that choice is great.  Having options at dinner time satisfies those with different tastes or different diets. Having clothing options allow for appropriate attire for different activities. 

But all choice has an impact. Take for instance a technology choice: DVD versus Blu-Ray. Blu-ray has a larger storage capacity, therefore allowing for higher quality video and audio, making it appealing. But a choice for Blu-ray requires investment in additional technology: a Blu-ray Player. 

But what about choice for payments? Good or bad? Most would also say that choice is good for payments. But payment choice can lead to a similar issue as the DVD vs. Blu-ray choice.  A business can change to a different payment type, but there are other downstream systems and processes that also are impacted.  Some of those changes might be significant.  So, in today’s payments ecosystem, with payments changing rapidly, businesses are pondering the array of options available to them and the potential impacts. 

Clearly, Same Day ACH was brought to the market based on end users desire for more options – they wanted additional choices in terms of how fast they could send a payment.  So it is not surprising that the recent Same Day ACH Corporate survey is showing that Same Day ACH is gaining in popularity and moving a variety of payments faster.  Why?  ACH has been available to businesses of all sizes for decades, and the latest change gives significant choice without having to change everything in the adjacent processes. 

In the Corporate survey, 500 corporations and government entities were asked about their current and future planned usage for Same Day ACH credits and debits.  The reaction was consistent across many industries – manufacturing, transportation, health care, professional services, and more.  In 2018, 59 percent of corporations plan to increase their use of Same Day ACH credits.  This data points supports the notion that it is natural to increase the use of an existing payment type already being supported when it adds benefits to those already using it. 

Think about the results of another survey conducted by the Credit Research Foundation, in collaboration with NACHA, last summer. In this survey of corporates, a whopping 70 percent said that an ACH credit was their preferred method of receiving a payment.  No other payment method was even close in terms of preference.  So, it is not surprising to see that now that Same Day ACH credits have been available for over a year that respondents to the Corporate Survey state that they like it because it’s fast, convenient, and saves them time.  It certainly provides these benefits because it is like stepping on the gas pedal – speeding up processes already in place. 

What about Same Day ACH debits?  Most were surprised that in December of 2017, three months after their introduction, that same-day debits had the same volume as same-day credits.  So businesses clearly see the value in faster ACH transactions. And not only are they reaping the benefit of speed, but the ability to pass significant information right with the ACH payment.  This helps straight-through-processing, which often does require even further downstream changes. But businesses can start in small ways – start with a remittance indicator passed with a payment before accepting the full capability of 9,999 addenda records with an ACH payment. 

Is your business looking at the vast choice of payments today?  Do you need help in looking at those choices and what it means to your organization?  NACHA’s consulting team, Elevation, can help.

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Topics: Faster Payments, ACH Payments

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